Each time, the Fed kept the pedal to the metal on its giant money presses. And each time, there was a new crisis to justify their reckless DUI.
Yellen takes the cake ...
In the Forked Tongue category, wannabe Fed chief Janet Yellen has now eclipsed Fed Chairman Bernanke for the first prize.
In her testimony before Congress this week, she says little or nothing about the 2008 debt crisis, federal deficits, European debacles, fiscal cliffs or any others which were among her predecessor's favorite excuses for the unprecedented money printing she vows to pursue.
Nor does she talk much about a weak economy.
Instead, her new rationale is that, although the economy has improved, it hasn't quite improved "enough."
As Mike Larson eloquently notes, it seems the "not-improved-enough" argument is all that's needed to justify continue running the Fed's printing presses — and doing so at the same speed as Bernanke did in the immediate aftermath of the Lehman Brothers collapse.
The end result is vividly illustrated in this chart:
It tracks the U.S. monetary base, a direct measure of how much money the Fed has been printing — and injecting into the banking system.
It depicts how the sheer magnitude of the Fed's monstrous expansion is mind-boggling in the extreme.
To better comprehend this monster, start by looking at the relatively gradual slope of growth in the 1990s and 2000s — before the Lehman Brothers failure. And bear in mind that even that "slower" pace was considered irresponsibly rapid by many experts.
Next, look at the sudden explosion that began immediately after the Lehman Brothers failure! That's when the Fed threw all its old rule books into the East River. And that's when the Fed flew off on a new, high-risk trajectory into the outer space of monetary policy.
Then, see how the Fed's immediate response to post-Lehman crisis (QE1) was replicated not just once, but twice — with QE2 and QE3.
Last, consider these outrageous facts:
Fact #1. Immediately prior to the Lehman Brothers failure, the Fed reports that the monetary base stood at $849.8 billion.
This past October 30, it was $3,607.7 billion. That's an expansion of $2,757.8 billion — over $2.7 trillion.
Fact #2. This $2.7 trillion expansion has all taken place within just six years and one month.
If, instead, the Fed had continued to expand the monetary base at a normal pace (by the same amount as it had since 1961), it would have taken nearly 150 years to come this far. In other words ...
With normal growth, the Fed's recent $2.7 trillion monetary expansion would not have been achieved until the year 2158!
Fact #3. Prior to 2008, there were only two times the Fed embarked on extremely rapid monetary explosion of this type — first in anticipation of the widely feared Y2K bug; and later, in the aftermath of the 9-11 terrorist attacks. But as of the latest tally, the post-Lehman QEs have been
a whopping 43 times larger than the dramatic Y2K expansion, and ...
an unbelievable 69.5 times larger than the Fed's explosive reaction to 9/11.
The most alarming fact of all is this ...
While the Fed has used crisis after crisis to justify its monetary madness, it has not yet begun to resolve the underlying diseases that gave rise to those crises. It has merely papered over their symptoms.
Hard to believe?
OK. Next week in this column I'll give you the hard evidence.
Plus, I'll tell you about an even more unbelievable consequence.
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